What is a Cash Disbursements Journal?

Definition: The cash disbursements journal, also called the cash payments journal, is a journal used record and track all the cash payments or disbursements by a company. In other words, all cash outflows are recorded in the cash disbursements journal.

What Does Cash Disbursements Journal Mean?

Bookkeepers and accounting systems record transactions in the cash disbursements journal before the transactions are posted to the general ledger, accounts payable ledger, and other ledgers.

The cash disbursements journal is typically setup the same as other journal with columns for the transaction date, payee name, account debited, account credited, and the cash change. The most common accounts found in this journal depend on the company.

Example

For instance, a retailer would have many payments for inventory, accounts payable, and salaries expenses. A manufacturer might have entries for raw materials and production costs. The journal shows the accounts that are debited and credited in each transaction as well as the effect on the overall cash balance.

Management can use this journal to not only see how much cash has been disbursed, it can also track what cash is being used for. In other words, management can look through the cash disbursements journal and see what ratio of cash is being spend on inventory compared to the amount of cash being spent on paying other bills.

Since the cash disbursements journal also includes the check numbers of any checks that were issued, management can clearly scan the journal for missing or incorrectly written checks. This is why many accounting software packages like Quickbooks tend to call the cash disbursements journal a check register.